EMC's new Insignia line of products and channel program show that no one can ignore the SMB market anymore, not even a storage giant that built its business in the enterprise
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When EMC&'s Joe Tucci looks at small business, he sees big business.
The EMC chairman, president and CEO thinks his company can build a new billion-dollar market in the small-business space, the latest step in EMC&'s relentless drive to dominate the storage industry.
EMC begins its assault this week, armed with a new product line specifically for small businesses under the EMC Insignia brand—a brand that EMC said will not be available to Dell, its biggest partner and the channel&'s biggest competitor, even though Dell will be able to sell the products. The EMC Insignia product line is complemented by a new channel program called Velocity SMB, aimed at drafting an army of partners to carry the fight against such tenacious foes as IBM, Hewlett-Packard, Symantec/Veritas and CA.
While EMC is the dominant storage vendor in the enterprise and midrange space, the company is unknown to many, if not most, small businesses. But EMC can do well in that market despite the lack of brand-name recognition, said Kevin Klein, president of Three18, a small-business VAR in Santa Monica, Calif., because small businesses turn to solution providers for help with storage. “They trust us,” he said. “When we talk storage, we talk EMC. Customers ask if we use it, and we say yes.”
EMC is, however, known to users of Dantz Retrospect, a data backup and recovery application EMC acquired when it bought Dantz Development in late 2004. And it is on Dantz, its channel partners, and its co-founder and former CEO Larry Zulch that EMC is building its Velocity SMB channel program, and in the process, making itself known to the small-business market and channel.
“We can&'t do [it] without you,” Tucci said, referring to the channel. “You&'re going to be part of the EMC family. And you will prosper, both financially and with growth in your company, by working with us. When we enter something, we don&'t do it halfway. Pretty much, we&'ve been silent, testing, doing little things. Dantz has had great success. Now we&'re putting it together [with EMC].”
What EMC is putting together under the EMC Insignia banner is a series of products from several acquisitions in the past few years. In addition to Retrospect, EMC Insignia includes the Storage Administrator for Exchange e-mail storage management software from Allocity, VisualSRM SMB Edition storage resource management software from Astrum Software, RepliStor SMB Edition from Legato, and eRoom collaboration software from Documentum. Completing the solution is EMC&'s entry-level Clariion AX100 storage array.
Even more important than getting the right product set was setting up the Velocity SMB channel program, Zulch said, because EMC recognized from the start that small business is not a direct play. The company has made it easy for solution providers to sell its EMC Insignia-branded hardware and software, with a minimum annual requirement of $62,000 in hardware sales or $25,000 in software sales. Recruitment of new partners is a priority. “We&'re not focusing on [only] a few ‘quality&' partners,” he said. “We want to be a great partner to solution providers with five to 10 people, partners who are the IT staff of SMB customers.”
Pete Peterson, vice president of product marketing systems at Clearwater, Fla.-based Tech Data, which with Ingram Micro are the initial distributors of EMC Insignia products, said his company can bring in solution providers now that in the past did not have access to EMC&'s SAN product portfolio. “EMC just didn&'t have the product set to address this market before,” he said.
It&'s a logical next move for EMC.
EMC, together with Dell, which sources nearly all of its disk storage products from EMC, had a combined market share of more than 20 percent of the $5 billion overall storage market in the third quarter of 2005, according to research firm IDC. For external-attached storage, the combined share topped 28 percent.
During last month&'s fiscal 2005 earnings conference, Tucci said EMC grew particularly strong in the midrange storage market, with sales in this space up 31 percent over 2004. However, he told CRN, the small and midsize space is where the real growth prospects lie. While the company has enjoyed the fruits of its enterprise and midrange strength, “it did not go unnoticed that the lower-end SMB market was growing faster than the midtier market,” Tucci said. “But you can&'t do too many things at once, or you end up doing everything halfway.”
That potential growth, which IDC estimates to be 9 percent annually, has pushed EMC to invest heavily in marketing funds and product development for the small-business space, said Howard Elias, EMC&'s executive vice president of corporate marketing in the office of technology and new business development. “We view it as a greenfield opportunity,” he said. “It is the highest growth segment. If you look at the U.S. enterprise space, we have a tremendous share. In the international enterprise market, we have our second-highest share. In the midrange, we have a very high share. But look at SMB, and I don&'t think we show up.”
EMC introduced its first sub-$5,000 array, the AX100, nearly two years ago, but the seed that would eventually become the Velocity SMB program was planted with the Dantz acquisition. “It was the classic Joe Tucci twofer,” Zulch said. “EMC gets a new technology and a new customer segment.”
It also got Zulch, who with his storage channel and technology experience, was immediately put in charge of launching EMC into the small-business space, and who now serves as vice president and general manager for EMC Insignia. Zulch put together an autonomous team anchored by former Dantz employees while working with Tucci and other top EMC executives to adapt products from their portfolio for the new market. “They tell us what we need we&'ll get,” he said. “It&'s a balance between integration within EMC and autonomy.”
EMC&'s new initial channel base is coming from thousands of current Dantz Retrospect VARs, including several hundred active partners, Zulch said.
Legacy Dantz VAR Craig Flint, owner of Computer ER | CERNetworks, Missoula, Mont., said he has been waiting for EMC to bring a suitable small-business offering since it acquired Dantz. Flint said his customers, which typically have between 50 and 100 users, in general have not bought into the concept of centralized storage but that EMC has the potential to change that. “We looked at EMC, but it was always out of our price range,” he said. “But now they are going to bring in a product line at a price a lot of our SMB customers can afford.”
Three18&'s Klein, who has worked with Dantz for 10 years, is looking forward to taking the EMC Insignia line to his customers and not relying on other vendors&' hardware and applications to go with the Dantz software. “Now we can come in with a complete solution,” he said. “But it can also be modularly deployed. There&'s no need for customers to have a big capital budget up front to start.”
The EMC small-business message also resonates with smaller VARs that currently do not carry any EMC products. Eryck Bredy, president of solution provider Bredy Network Management, Woburn, Mass., said while he has helped some midsize customers implement Clariion systems they purchased from Dell, this is the first time he has seen EMC cater to small businesses. “I&'m absolutely interested in working with EMC and small businesses,” he said. “They have good products, and we already have a knowledge base with them.”
Other small-business VARs, such as Tom Rash, president of Northwest Computer Support, Tukwila, Wash., and Carl Wolfston, director of Headlands Associates, Pleasanton, Calif., said they see no reason to add EMC when their clients are already satisfied with vendors such as Symantec/Veritas and HP. “Those vendors have always worked for us,” Rash said. “I&'d have to be really pissed off to look elsewhere. It&'d be really hard for me to change the way I do storage.”
Rash is also worried that, despite EMC&'s assurances to the contrary, the company is merely dumbing down its software for small-business use, a product strategy he said almost never works. “I believe that a lot of companies that start in the enterprise and then lighten up don&'t do a good job,” he said.
Wolfston questioned why any VAR would want to work with yet another vendor that will sell through anyone, including direct marketing resellers such as CDW. “I&'m not getting excited,” he said. “Every Tom, Dick, and Harry can get in.”
Computer ER | CERNetworks&' Flint, however, said EMC can succeed in this space, as long as it takes its channel lead from Dantz. “We&'ve always been happy with Dantz and how they handle us and the channel,” he said. “If EMC keeps the program the same as Dantz [did], it might work. And our EMC sales rep is telling me Dantz is still able to do what it wants.”
STEVEN BURKE contributed to this story.